The Globalization of R&D

Mark Marich

The latest edition of Booz Allen Hamilton’s Global Innovation 1000 was released earlier this month. The list ranks and assesses the world’s 1000 biggest corporate research and development (R&D) investors. The globalization of R&D is the big trend found among this year’s top R&D investors. In fact, the top eighty US R&D spenders invested $80.1 billion overseas (out of total spending of $146 billion). US firms are not alone in this trend, as top European and Japanese R&D spenders also much of their R&D funds overseas. The top 50 European firms deployed roughly 43 percent of funds overseas, while Japanese firms spend 56 percent funds outside of Japan. While the traditional R&D leaders are moving much R&D offshore, the pattern is not simply one of outsourcing to other locations. A wider circulation of R&D is happening, as US, Europe, and Japan invest overseas, but also attract incoming R&D dollars, too. In fact, forty percent of corporate R&D spending in the US is generated from firms headquartered elsewhere. Overall, the Global Innovation 1000 now spend an average of 55 percent of their R&D funds in other countries. The globalization of R&D has now become the norm for the world’s most innovative firms.

The 2008 Global Innovation 1000 is profiled in the Winter 2008 Strategy+Business article, “Beyond Borders: The Global Innovation 1000,” by Barry Jaruzelski and Kevin Dehoff.

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